Endless Pizza Opportunities

Whether going with a branded option or developing a proprietary menu, pizza appeals to a wide variety of pallets.

There will always be a market for pizza. Customers love it. It’s fast, fresh and convenient—everything that helps make convenience stores a top option for on-the-go foodservice.

However, choosing a branded pizza partner means balancing a complex equation that weighs such factors as product quality, financial and logistical considerations, marketing programs, employee training, ongoing support, brand equity and local competition. Retailers also have the option of developing a proprietary option to differentiate its offering in the market. Suddenly, a cheese pizza isn’t so simple any more. It’s a complex decision that must be made carefully.

“Pizza has never been a fad,” said Jerry Weiner, vice president of foodservice for Rutter’s Farm Stores. “It’s a staple.”

The brutal economy hasn’t slowed pizza’s popularity, though price wars from the industry’s heaviest hitters have provided some preventive maintenance. Domino’s and Pizza Hut benefitted from lowering their prices—like Pizza Hut’s 8-10-12 campaign, which simplifies pricing (medium, large, specialty)—but are left wondering how to up prices to stabilize the balance sheets, noted Jennifer Litz, editor of Pizza Marketplace.

“The price fluctuations are causing continued resistance from consumers,” Litz said. “You’re still going to see people very sensitive to price.”

That is good news for convenience store foodservice programs, a target for consumers who are watching their wallets. In October, 36% of surveyed consumers reported to Chicago-based Mintel that they were visiting pizza restaurants less frequently than the year before; in turn, frozen pizza sales across all channels rose 8% from 2008 to 2009.

Twenty-three percent of those surveyed said they were buying more pizza at the grocery store, while a quarter said price determined their pizza choice more than it did in 2008. This price-focused behavior boosted private-label sales on all products and made way for innovation.

Pizza Innovations
One of the hot new possibilities in the pizza world is pizza in a cone, which has been popular in Europe (Konopizza) and is on the verge of wide-scale exposure in the U.S. Portable and cheap, it is one pizza answer to meal deals like Subway’s highly-successful $5 promotion. It’s a product that would fit right into the handheld-food arena.

Franchise pizza chains accounted for 60% of the market in 2009, and from that group comes plenty of convenience store pizza, i.e., Pizza Hut Express. Then there are turnkey programs, like Hot Stuff, Hunt Brothers, Noble Romans and Piccadilly Pizza, whose business model revolves around small retail spaces. Litz said Jane’s Dough, a sister company of Donato’s, is an example of a model that attempts to provide the grocery and convenience channels with different pizza needs.

Jane’s Dough can provide a turnkey program, like Brick St. Pizza or a private-label take-and-bake offering. It entered the off-premise market with its work with Kroger and now includes partnerships with Quick Trip, Certified Oil, Village Pantry and Royal Farms. It also works with foodservice distributor H.T. Hackney.

It’s that kind of dough-centric company that Weiner was searching for during most of 2010. During his long career, Weiner had worked with partners like Pizza Hut (Rutter’s has two Pizza Hut Expresses, down from nine), Little Caesar’s and Hot Stuff, and wanted to have his own brand in his second stint with Rutter’s, in part to move toward his goal of a varied-menu take-home-dinner offer.

“What I was looking for was something more efficient, with better control of spoilage and profitability,” Weiner said.

Rutter’s began selling its proprietary line of nine-inch fresh-baked and take-and-bake pizzas in November, the result of Weiner’s in-depth research. Customers in the 38 (of 56) stores that feature touchscreen ordering can choose cheese or pepperoni and up to six toppings for one price.

“A nine-inch pizza is a good size for c- stores. It can fill dad up, it would fill two kids up, it would fill up a mom and one kid,” Weiner said. “The simplicity is important, as is having a product the consumer wants.”

Seamless Fit
To make the proprietary move work, Weiner wanted to save space and labor by using the high-speed TurboChef ovens already at the stores, and reduce the time from ordering to completion to ensure minimal waiting. “The upside of co-branding is that you get the power of the brand,” said Weiner. “The downside is it takes five-and-a-half minutes to cook. Your turnover is difficult to keep up with.”

Weiner wasn’t as concerned with toppings or sauce as he was with the dough. It needed to be nine inches, par-baked, taste fresh-baked and be done quickly. “Pizza to me is about the dough and the sauce,” Weiner said. “Sauce is about taste and seasoning. The dough is the magic.”

After a thorough research phase—“I ate a lot of pizza,” Weiner admitted—he found the right combination from a nearby supplier. The pizza is cooked in three minutes. If the product is taken home to cook, it takes 10 minutes at 425 degrees. In its first two weeks, and with no advertising, the pizza did a little better than Weiner had expected, even in the two stores that have the Pizza Hut Express. To generate interest, the offering was attached to Rutter’s loyalty program with a three cents-off-per-gallon offer.

“I measure everything new in units per store per day or per week. Within 90 days I have to get that number up high enough to stay,” Weiner said. “This should have a tremendous impact on the waste factor, and the penny profit should be greater.”

Mike Harrell, president of Jernigan Oil Co. Inc., operates 25 Duck Thru c-stores in Ahoskie, N.C. He wanted a pizza program with strong brand recognition in his markets, but didn’t want to be saddled with a costly upfront investment and monthly franchisee fees because his stores don’t generate the volume required to be profitable with a national brand. But he also didn’t want to sacrifice quality or variety. “We operate in rural towns, so we’re fortunate not to have a lot of foodservice competition at some of our stores. This gives us an advantage, but also comes with a lot of responsibility,” Harrell said. “We can’t just offer a simple variety. It has to be fresh, innovative and affordable enough to attract the customers day after day.”

Duck Thru chose Hot Stuff Pizza from Hot Stuff Foods because they only require distribution agreements, not monthly licensing or franchise fees. “Our support has been excellent on all levels,” he said. “A Hot Stuff rep is in our stores about once a month monitoring our consistency, offering suggestions and elevating our entire platform.”

Branching Out
Expanding the pizza menu is the next step. Weiner said he would consider expanding Rutter’s pizza line to include breakfast pizzas and toppings like sausage and chicken, but for now he is reaping the benefits of a popular new product introduction.

“It’s very appealing across demographics,” Weiner said. “And all demographics touch c-stores. Trying to appeal to all of them is difficult. Pizza appeals to all of them.”

Litz, of Pizza Marketplace, said one new concept that seems like a natural for c-stores looking for co-branding franchises is  “Top That!” The idea is similar to a build-your-own assembly-line service like Subway or Chipotle. The first opened in Tulsa, Okla., in October. Customers choose from three doughs, nine sauces, 20 vegetables, 10 meats, seven cheeses. Once their pizza is assembled, it cooks in three minutes. The price is $5.99 regardless of the number of toppings. “It’s all positioning and differentiation,” Litz said.

  • Harrison

    The Pizzacone is certainly a great addition to the Pizza category – what’s especially great is that the cones need not be limited to Pizza (unless it’s pre-filled). Savory cones can provide equally exciting offerings and new daypart opportunities when filled breakfast fillings, bbq, mexican, deli and even pie fillings. Suppliers such as U.S. based Crispycones are on the forefront of this market and are becoming known for manufacturing a delicious, versatile, highly consistent variety of baked cone shells.

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